Stocks: Strong Macro Backdrop Supports Resilience – Danske Bank

Danske Bank Research's latest report notes that despite several markets closing the week lower, overall equity market resilience remains a focal point. The bank emphasizes that strong macroeconomic and earnings data, along with the materials sector's outperformance relative to utilities, indicates the market is not seeing a defensive rotation.

**Macro and Sector Momentum Provide Support**

The bank's analysis suggests that low VIX levels, sustained AI capital expenditure, and oil-related narratives collectively form the core factors underpinning equity market resilience. The strength of the materials sector is particularly noteworthy, with its outperformance versus utilities serving as a key indicator that risk appetite remains elevated. This reflects that, amid solid macroeconomic data, investors still lean toward chasing more cyclical assets.

**Oil Price Outlook and Macro Risk Mitigation**

On the macroeconomic front, geopolitical developments have also aided market sentiment. According to reports, as US-Iran talks progress, Goldman Sachs has lowered its forecast for the probability of a US recession over the next 12 months from 25% to its long-term average of 15%, while raising its H2 GDP growth forecast. Danske Bank, meanwhile, projects Brent crude will average $80 per barrel over the remainder of 2026, and believes that even if a US-Iran deal is reached, oil prices will not return to the pre-war level of $60-70 per barrel, which helps stabilize market expectations regarding energy costs.

**Market Narrative Focuses on Growth**

Overall, the current market narrative is shifting from recession concerns toward recognition of structural growth drivers. Danske Bank's view suggests that as long as macroeconomic data remains resilient and the narrative of capital spending in areas like AI is not broken, the positive tone in equities could persist. However, investors should still monitor actual oil price movements and the subsequent progress of geopolitical negotiations to assess their potential impact on inflation and the growth trajectory.